Singapore government-owned investment firm Temasek Holdings is bullish on India story. The firm is learnt to have been scouting for unlisted companies, especially in consumer goods and healthcare sectors.

According to Temasek, the last year was one of the best years after the financial crisis in terms of investments that it made. Media reports suggest that with new government at the Centre, focused to revive growth, Temasek too, like other foreign funds, could pump in more money into the country this fiscal than in the past year.

In an interview to CNBC-TV18, Rohit Sipahimalani, Co-Head-Investment Group, Temasek, said last year was one of the most active years for the firm in terms of new investments and partly it was because there was weakness in some of the key markets like China and to a certain extent even in India in the latter half. “We saw that as an attractive opportunity to step up our pace of investment.”

“India resonates strongly with out investment themes… I think India today is an active investment destination for us and we we will continue to be quite active here,” he said.

Below is the transcript of Rohit Sipahimalani’s interview with Sajeet Manghat on CNBC-TV18.

Q: Can you give us a broad picture of what kind of investments went in the last financial year?

A: It was one of the most active years for us in terms of new investments and partly it was because there was weakness in some of the key markets wherein we operate such as China and to a certain extent even in India during the latter half of last year and we saw that as an attractive opportunity to step up our pace of investment.

Q: In your review you have mentioned India and China to be transforming economies but when we look at the investments that went from Temasek in the last financial year, a majority of them went into China and not into India. Why is that?

A: We were very active in India last year and particularly in the public markets where we saw significant opportunities during the dislocations in 2013.

Q: You were active in the secondary markets but you were almost absent from the primary issuance market especially private equity part of it. Why is that, did you see some aberrations coming into valuations in the private equity market?

A: Last year you had a situation particularly in the latter half of 2013 where the Indian capital markets were severely dislocated and you saw some very attractive blue chip companies trading at a very attractive valuations regardless of what sort of economic environment projected. Therefore, in that situation we saw an opportunity for us to invest in those blue chip companies at attractive valuations relative to private opportunities which were more expensive. Today I can tell you most of the pipeline we are looking at is more bias in favour of private opportunities.

Q: I was going through your review and you said geopolitical risk from Ukraine to the South China Sea cast an uncertain shadow in contrast to optimism in India from a positive election outcome. Are you positive on India and have you turned outlook India more positive as compared to last few years?

A: For the first time in about 30 years you have a single-party majority and therefore that should bode for more stable policy certainty and most able execution hopefully and apart from that India has gone through a down cycle and we do think the economy has bottomed out so from that perspective we are positive about the outlook for the next few years.

Q: That is interesting because you are saying that you have the third largest office in India but when you look at the portfolio, India doesn’t figure as the third largest investment destination. Your portfolio allocation to India has fallen from 7 percent of overall exposure to nearly 4 percent today. Why haven’t you kept pace with exposure as far as India is concerned?

A: Our investment pace will be driven by the opportunities we see and we are seeing very attractive opportunities in our pipeline and I do see us investing quite actively here.

Q: You been known to take big bets and some of the big bets were ICICI Bank , Bharti and those have given you a big portfolio exposure as far as India is concerned. After these two, we haven’t seen any investments which will be in the range of Bharti or ICICI Bank, of course you came back into ICICI Bank last financial year through secondary market purchase but why hasn’t Temasek taken any big bet on India?

A: We won’t do large transaction just because of the sake of doing large transaction. If we find attractive opportunities, USD 1 billion-2 billion, we will definitely look at those serious and we have the capability of doing so.

Q: Few years back I was looking at the Private Equity (PE) League table and Temasek use to be on top of it. Today, if you look at the PE League Table – Blackstone, KKR are the ones who are on top of it and Temasek is much lower. Why is that?

A: For example Kohlberg Kravis Roberts (KKR) would typically do private equity type transactions whereas we can do public market transactions too and last year was a period where we saw much more attractive opportunities in the public markets relative to the private markets. Today we have a very active pipeline of private opportunities which we see are quite attractive and which hopefully should play out over the next few months.

Q: How does India figure as far as returns are concerned?

A: We do not talk about specific returns by market but for the last year Indian market did quite well, so to the extent our listed portfolio here is concerned, it obviously did well.

Q: Coming to you portfolio – 41 percent of the portfolio is invested in Asia and within Asia a majority is invested in China. Of the new investment that came, went into these countries, majority went into China and few secondary market investments came into India. When you look at India as an investment destination, what are the things which you compare with other countries like China or Singapore or any other country where you have invested before you go ahead and invest in India?

A: India resonates strongly with our investment themes. If you look at our investment themes of transforming economies, growing middle income populations, companies with unique comparative advantages in areas like pharmaceutical, IT services and services or emerging champions in some of these export oriented sectors, they all themes that resonate strongly in India which is why we see this as an interesting market for us. I wouldn’t compare one market vis-à-vis the other. I think India today is an active investment destination for us and we think we will continue to be quite active here.

Q: You were mentioning about investment themes and consumer and technology has been one of them where you have gone ahead and invested in some Indian consumers like Godrej, Godrej Consumer and Godrej Agrovet and in some warehousing companies like Star Agriwarehousing etc. But technology is where you have been a little behind the curve if I may say as compared to other private equity because in technology you are seeing a lot of private equity investments coming into startup s, technology, digital and you haven't been very active in that area as far as India is concerned.

A: I wouldn’t say that. Most recently of course we have invested in Snapdeal. That is ecommerce but if you look at technology, partly it is a question of from our perspective I see ecommerce also as a technology enabled platform. So technology for us actually the most interesting part of technology today is not technology by itself but how it is transforming different industries, whether it is retail, whether it is utilities, whether it is healthcare, whether it is other areas and ultimately that is a key focus area of innovation that we are looking at across the world.

So in China we have investments in online video, we have investments in ecommerce like Alibaba, we have investments in online education. These are technology enabling businesses disrupting different business models. It is something you need to look at very actively in India. There are few that we are looking at right now but ultimately we see investors, we are little more growth investors. So sometimes you will find us coming in a little later after the company reaches certain amount of maturity.

Q: You have taken exposure in Snapdeal last year. Tell me about your ecommerce expectations, the business model of ecommerce is something which is widely debated in India and globally. When you look at ecommerce as a sector and to invest into it, what exactly do you look at?

A: We were actually an early investor in Alibaba few years ago and then subsequently have made more investments out there.

Q: Will you be offloading some shares when the Alibaba IPO comes in?

A: We don't know about the IPO but at this point there are no intensions to do that.

Similarly in Brazil we have invested in a company called Net Shoes out there. Alibaba is a market place, Net Shoes is more an investor based sales model. So they are different business models and different models have different characteristics.

The one important thing is we clearly see a lot of potential for ecommerce in India in terms of growth. We see the market grow probably six times in the next three-four years in terms of overall transaction volumes. So clearly there is a huge opportunity out there.

Frankly Snapdeal was an attractive market place model that we saw. The model is actually very similar to what Alibaba has in China. We thought it was an interesting play for us.

Q: You think that a market place model is much better than an investor based model?

A: I think both will exist there is no question about that.

Q: What will create value for the shareholders?

A: Ultimately it is cash flows and profitability which may be a longtime away but ultimately that is going to be the proof of the pudding.

Q: Which will create more cash flows first?

A: It is very difficult to say how individual markets will evolve, I can only point you to one example in China where Alibaba has been the market place model and you have another ecommerce player like JD which is more inventory led. From a cash flow perspective clearly the market place model there has been less capital intensive and has generated earlier profits for shareholders. But in ecommerce India is very early, I would not try and predict, both models will exist and it is too early to say how each one will play out.